Name
Global FinTech Guide
Country _ Name
Czech Republic
SectionTitle
Loan services / factoring / loan broking / finetrading
Body
FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.

Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.

As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.

Introduction

Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services

In Czechia, loan services provided by FinTechs are used as an alternative to financing models by traditional credit or financial institutions, e.g. in those cases when the traditional credit or financial institutions are not interested in providing the required loan (e.g. Zonky).

Also, several FinTechs allow third parties to invest in loans provided by credit providers to businesses or consumers (e.g. Zonky or Bondster) or invest in receivables of different nature (e.g. Roger).

Legal affairs

Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above

Depending on the product/business model, different legislation may apply.

First of all, there is no specific legislation in the Czech Republic applicable to factoring. In the case of loan-related services, the regulatory implications in Czechia differ depending on whether the debtor is a consumer or not. B2B (or C2B) loans are not explicitly regulated. On the other hand, B2C loans (consumer loan) fall within the scope of the Consumer Credit Act (Zákon o spotrebitelském úveru – “ZSÚ”).

ZSÚ stipulates who may:

  • provide consumer credit as an entrepreneur (credit institutions, licensed payment services providers or non-bank consumer credit providers with license pursuant to ZSÚ);
  • intermediate consumer credit as an entrepreneur (only an entity with license pursuant to ZSÚ).

All these entities must follow the rules stipulated by ZSÚ during the provision or intermediation of consumer credit. ZSÚ also stipulated license requirements that providers licensed pursuant to ZSÚ and intermediators must meet to obtain the given license. The costs of a licensing procedure include the administrative fee (up to CZK 50,000, i.e. approx. EUR 2,000) and additional legal and other associated costs (the amount depends on the license type).

Furthermore, anti-money laundering and data protection regulations are to be complied with.

Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area

In recent years, ‘Buy Now, Pay Later’ services have become more popular since the provision of these services does not require a license as long as the client is not obliged to pay any interest to the provider.

Also, one of the legal topics that has been heavily discussed recently is how consumer credit providers should assess consumers' creditworthiness since failure to do so (in an adequate manner) results in a void consumer credit contract.

Economic conditions

Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area

Currently, no reliable statistics are available for the Cz

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